Q4 2015 Earnings Season Review – The Corporate Revenue Recession Deepens
The fourth quarter earnings season for S&P 500 companies is officially wrapping up. The season started out on a sour note in January, with turbulent US markets, currency headwinds, plunging oil prices and a weakening Chinese economy all plaguing the large cap companies, and things only got worse from there.
Year-over-year profit growth for the S&P 500 stayed negative throughout the quarter, closing out at -1.8%, with even lower revenue growth of -3.5%. Both of these numbers fell significantly from what was expected at the beginning of the season, with analysts initially calling for negative earnings per share (EPS) growth of -1.4% and revenues of -2.2%. Just taking a look at the beat rates gives us some clues, with only 55% of companies able to beat the Estimize consensus, and an even steeper 41% beating on revenues. Both of these are far lower than historical averages…
"Much has been made over the last year of an impending “earnings recession,” ie: three consecutive quarters of YoY profit declines for the S&P 500. However, we haven’t seen a down quarter for EPS since 2009, just barely seeking out of the red last quarter with 0.6% growth. Revenues on the other hand are heading for their fourth consecutive quarter of negative growth, meaning sales growth was technically in recession territory at the completion of Q3 2015." (Source: Estimize)